Tuesday, April 29, 2008

FPU Session 14: The Great Misunderstanding

This was the last session. I posted a picture of our completion certificate here.

Right down to the last minute of the last class Ramsey sticks true to his style. Straight talk about the basics fueled by intense motivational language that calls for action.
"The Great Misunderstanding, the paradox, is that we believe that the way to have more is to hold on to what we have more tightly."
Ramsey drives home the biblical stewardship principle in this lesson - that we are merely managers of the money God allows us to work with, in order to show and test our faithfulness. He discussed giving in general but he does not get into theological hair splitting on what Tithing really means.

It's funny how so many church goers like to argue (or, rationalize) about the tithe with studies have shown for decades that the typical evangelical church member family gives less than 3% of it's income. Tithe means 10%. When you are tithing, you are giving 10% off the top of your overall household income. Perhaps I'll post on this sometime in the future but I am persuaded that I should be giving away as much of my income as possible - as much as possible, much more than 10%. I would love to do this but I must also take care of my family first (or I am worse than and unbeliever, Timothy 5:8). Tithing is not a rule but a guideline, or rather a place to start, something to shoot for. Amazingly, its a guideline that currently no one is meeting! There should be no arguing over what Tithing really means, no one is doing it by definition anyways!! Eventually, but sooner than later, I want my family's giving to far exceed 10% of gross income. If we work hard to get out of debt in the next 24 months, we'll be able to give much more.

I so often lose touch with biblical stewardship principles on a daily basis in the midst of rising gas prices, rising food prices, falling home values, rising (you fill in the blanks). It is so easy to think my job in life is to try to get a head, to always be looking for ways to maneuver through fast flowing turbulent financial times of my present life. What I need to do more of is rest, trust, and depend on my Lord. I want to recall more quickly that my wife and I do not own a thing, but, for our own good, God entrusts us with resources and ordains the circumstances so that we are drawn closer to Him, or so that the idols of our hearts are exposed as the usurper kings that they are. This is the big picture that puts perspective on everything. Debt snowballs, part-time jobs, baby steps, etc are not the end of the matter. In the midst of them though, the heart of giving comes before all else. It is through giving that the heart changes and becomes more like Christ the King. In the end, the goal with money is to become more like Christ by giving it all away.

Saturday, April 26, 2008

Debt Poll

Check out the debt poll in the sidebar to the right of this post.

How much debt do you and/or your household have?

Tell me in a comment what you are doing about getting out of debt?

Thursday, April 17, 2008

FPU Status Update: Emergency Fund Restored

I just transfered money to our Baby Step 1 Emergency Fund savings account. We're back on track since this set back on March 24th.

My wife and I have decided to build up the baby step 1 fund a little bit more. We are going to split the extra payments we've budgeted for our debt snowball in half until the emergency fund has another $750 to $1,000 in it. Yes this will slow down the debt snowball but its so minimal compared to the extra security. Anyways, I think we will be using some of the extra funding for some bills that have come up. One big expense for sure is a pair of glasses for my oldest son.

By the way, it's his birthday today, he's eleven. Glasses - what a great birthday present.

Happy Birthday Bud!!!

He'll be so happy to hear about his present don't ya think? It is all in how I sell it to him "Josh, for your birthday, how'd you like to get your sight back?"

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This service is aiming to replace Paypal as the standard of sending and receiving money online. From my research it seems the biggest advantage Revolution Money Exchange has over Paypal is account holders can receive money in a transaction with out a fee. Paypal is good but this new service sounds really great.

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Click this button and sign up now. My $25 (and whatever I earn from referrals) is going straight to my debt snowball plan.

Refer A Friend using Revolution Money Exchange

Tuesday, April 15, 2008

FPU Session 13: Real Estate and Mortgages

This session was all about real estate. Ramsey certainly loves real estate. I'll just be honest, I was way too tired and stressed from the day to sit through his story telling this time. I was the most disengaged from this session than all the rest.

Ramsey covered the ins and outs (his ways) of buying and selling real estate. He approaches all of it like either a retailer or investor. There were some good tips but they were not relevant to my present situation because I am not planning to sell or buy a home right now.

As far as mortgages go, Ramsey strips away all consideration for any type of mortgage other than a conventional 15 year fixed. Also, payments should be no more than 25% of your income. Again, this session contained good information that can be tucked away for future use.

I did really appreciate one part of the session as it attacks a widespread myth.

Why keeping your mortgage for a tax deduction is a bad idea.

Baby step 7 is Pay off Mortgage early. What's the first thing that comes to your mind when thinking about this step? What about the tax deduction? The benefit of keeping a mortgage just to get a tax deduction is a myth - the math does not add up. Yet, financial professionals advice against paying off your mortgage early all the time (I was one of them.) Yes, there is a tax deduction for mortgage interest if you itemize but what does it really mean. Here is an example of the bad math:
  • You have a mortgage of $200,000 at an interest rate of 5%. So, each year you are paying the bank $10,000 in interest.
  • At tax time you would get to deduct $10,000 from your adjusted income. Depending on your tax bracket, you are only saving a percentage of this amount.
  • Let's say you are in the 25% tax bracket. You would then be saving 25% of $10,000 - or $2,500.
  • You sent $10,000 to the bank so that you wouldn't have to send $2,500 to the government?
  • The math does not work. It doesn't make sense.
  • You can get the same tax deduction by making a charitable donation instead.
Ramsey skipped an entire section from the workbook in this lesson on refinancing. Looks like he would have just covered a simple break even analysis on closing costs.

Monday, April 14, 2008

Ramsey rants and it is great

Last Thursday Ramsey went into extreme tough love mode toward the end of his three hour radio show. Actually the article that I posted about here sparked something in Ramsey and he went ballistic on the American consumer in general.

If you are willing to follow the steps I've outlined below, you'll be able to hear the rant. I wish it were easier but I promise it will be worth it.

Follow these steps:
  1. Click here to access radio show archives
  2. Locate the "Choose a show" drop down window. Choose Thursday, April 10.
  3. Locate "Choose a format", choose Windows Media
  4. Windows Media player will load up and the show will start playing
  5. You need to fast forward almost to the end of the show. Locate the slide bar at the bottom of the Windows Media player, directly above the Play and Fast Foward Buttons
  6. Move the slide bar and watch the timer on the bottom bar of the window - stop at 2:30:31 and then let the file play normally from there. The rant goes on for 10 minutes.
  7. Please find a techee friend to help you if you're not able to load the file.
Ramsey does not hold back. Let me know what you think.

Pay Down Debt With Tax Rebate

A week or so ago I posted a poll asking people what their plans are for the tax rebate coming in May (if you're eligible). Thirteen responses and 74% said they'd pay down personal debt. Two said they'd save it and one person said they're going to buy something. I thought those were results were pretty encouraging.

I love straight talk. Wisdom that lovingly smacks me right between the eyes. I need it. I came across an article the other day that I classify as straight talk on what one should do with their tax rebate.

Using rebate to pay down debt might rescue economy.

It starts out:

If you're like me, you might be a little confused about what we should do to jump-start a dangerously weak economy.

Here's what the federal government suggests: Spend!

But this is what many personal financial experts and economists recommend: Save!

There are always choices:

A White House fact sheet says the checks are designed to "stimulate consumer spending."

But some economists say the best thing we can do is to save those rebate checks and pay down debt.

"We are spending like there's no tomorrow," Michigan State University economist Charles Ballard told me.

A sociological phenomenon?

"It's almost beyond economics," Ballard said of our spending habit.

"It's more like a sociological phenomenon in which we have this desperate desire to consume, consume, consume."

Ballard says we need a more balanced mix of spending and saving so we don't end up owing our financial souls to our Chinese financiers.

Oh it is so much more than that!!!

Sunday, April 13, 2008

The Dream

Thinking about these babies will surely invite too much temptation into my life. I could find a pair on my feet with two easy skipped debt snowball payments. Not.

2008 Bont Vaypors. Aren't they precious? Hypothetically...which color would be best on me?

Friday, April 11, 2008

Questions That Need To Be Settled About Money

I've been reading Facts of the Matter for years now. This week's column is on money. Dwight Hill gets to the heart of the matter with these questions:
"In your heart of hearts have you settled the issue that your primary purpose in life is the pursuit and knowledge of the Holy One? Is knowing Him your consuming passion? Or are you still wallowing around in fear and anxiety as to where the resources for survival or opulence will come from? Just what does your daily schedule reflect about your priorities? One of idolatrous pursuit of the temporal? Or of a passionate pursuit of the Eternal One?"
Read the rest of the article here: The Vexing Issue of Money

Thursday, April 10, 2008

Help From The Pastor About The Extra Job

Below is an email my Pastor sent me about the extra job decision I am processing through. He was going to comment on my last post but asked me permission first beforehand. I appreciated his email so much that I asked him if I could feature it in a post instead and he agreed.

Pastor Porter knows me very well. When he sees me perseverating he inserts himself into the process with great effectiveness and always helps me clarify what's most important.

The email:

Pat, I am interested and a bit concerned. Does anyone know how many people after going through FPU get a part-time job to fix the debt issues?

Also, when I ask about sacrifice issues, I try to ask is this a sacrifice for me with little collateral damage to others? Or is there great collateral damage for others? If there is great collateral damage then, of course, it is not mainly my sacrifice, others are sacrificing, and thus, those others need to be completely on board with sacrifice.

I suppose another way to look at it is which is the greater responsibility: to be out of debt as quickly as possible or to love your wife? These are not mutually exclusive, of course, but by investigating this biblically, the Bible talks about the woes and dangers, and also at times the necessity of debt, and paying it off, while also specifically commanding you as a husband to love your wife and instruct your children in the discipline of the Lord. Is getting a part-time job loving your wife and Lord? Possibly. Are you being enslaved by the Ramsey command to get rid of debt as quickly as possible? Possibly.

Wisdom, is indeed called for here. I will be praying for you.

I love you, man.

Porter's words are very helpful because:
  1. They point to the freedom that is in Christ. I am free in Christ to choose with wisdom what I think is honoring to the Lord. This does not mean the decision is easier. It just clearly points out that even this decision means something more than just making more money. This fact lifts me out of the perseverating very quickly - it gets me out of my own head.
  2. The freedom in Christ then points me to the grace that Christ gives me every minute moving forward.
  3. They point out an idol of the heart. In everything there is an idol to war against. The war is in the heart and it is about the choice to turn something good into an ultimate thing. The extra job, the extra money, the quicker debt snowball payoff - good things. But, as Porter reminded me in another side conversation I had with him following the email, "The goal is not to be a Ramsey success story, but to be faithful to our Lord."
I place loving my wife and raising my children ahead of an extra job that will require too much sacrifice for us all. My wife and I have been walking through this decision together. She has expressed to me that something where I could work 10 hours a week or less is doable and worth it.

Have I decided yet? Closer but not yet. There is an opportunity for work right now. But, I want to first review again what the extra job will look like as in: When will I fit in the extra hours in? What will be the standard schedule I can communicate to my family? What defines success? How will I deal with my already waning energy levels? I've already addressed these issues but I am feeling little confidence in my answers.

Isn't this painful? To read about the process of a very slow decision maker?

Tuesday, April 08, 2008

FPU 11: Working Your Strengths

Mostly, personal finance problems are due to too much money going out the door. Overspending, high debt service levels, and disorganization are common factors. Sometimes though personal finance problems are related to there not being enough money coming in the door. In this session Ramsey looks at solving income problems. He teaches that raising income over the long-term (3 years or more) is a career track issue and raising income in the short-term means working a part-time job with the goal of attacking debt (with gazelle intensity)

I'll break my reflections on this session into two posts. This one will be about the dreaded part-time job and the next will be on career choice.

Dealing with sacrifice is what it takes to win with a short-term part-time job. The goal is to apply all the income to the debt snowball plan. I think too the key is to have a definite end date. I've been tossing around the idea of an extra job for a while now. I am hung up on the sacrifice to my family. Frankly, I am very concerned about the negative impact on my wife with me not around to help her with our high intensity, outgoing children. I keep telling myself "It will only be for six months" but I am just not confident the extra income will be worth it. We'd cut the time on our current snowball plan by eight to nine months. I guess this is where I see my real commitment level. How far am I willing to go to get out of debt? A part-time job will be an extreme test of faith for me and my family. Is it wise for me to enter so boldly into the test?

I really want the income but man I do not want to endure the pain (I think) the sacrifice will bring. As you can see, I am perseverating (one of my finest abilities.)

Saturday, April 05, 2008

Inline Training Starts Today

I officially declare today to be the first day of my inline training season. I'll be posting goals and my plan soon. Here is the route I took today - 5.2 miles:

View Interactive Map on

P.S. Goodbye for now Burton. Unless I can convince you to get a pair of skates...?? Anyone?

Friday, April 04, 2008

FPU Status Update

With the small debts quickly paid off during the initial momentum created by getting started on Baby Step 1 and 2, I am feeling somewhat like things have stalled out. But that is not true. I just need to get the focus back on to where we are at and look forward. We are by no means stalled out with nothing to do.

April is an important month because we are:
  1. Working on restoring the emergency fund after having to put new tires on the family van. The amount to restore is $506. I am placing half that amount from this recent paycheck and the other half will come from the next check.
  2. Still contemplating a second job. The extra money that would go straight to debt is very appealing but the time away from family is not. Also, my wife and I already feel completely exhausted with life as whole, how would we deal with the time stress of an extra job. I am still thinking about it but I should come to a decision soon just to get it off my plate.
  3. Continuing to tweak the monthly budget. This weekend I am going to run some month end reports for March. My gut feel is that although we did not spend more than our income for the month, we did spend too much in some categories like food and entertainment.
I am out of town on a business trip. Nothing big. Overnight in Bemidji, MN. Either way, I really miss my family.

Oh...something else very exciting, the MN Wild captured their first division title last night. Playoffs start later half of next week. The Wild will start at home.

Wednesday, April 02, 2008

Get Perspective. We Are Not In A Recession.

but not so - the American economy is not in a recession. Obama thinks he knows, the confidence in his declaration is simply mind boggling. He and the media are fueling a potential recession based totally on feelings. Most Americans feel as though we are in a recession. But did you know?
"During the 2000 election, with Bill Clinton as president, the economy was viewed through rose-colored glasses. According to polls, voters that the country was in a recession. Although the economy started shrinking in July 2000, most Americans through the entire year thought that the economy was fine."
This is a must read in order to gain and retain an accurate perspective as to where things are at currently in the United States economy.

A recession is not a feeling. Economic recession is a statistical fact. Keep the proper perspective. We are not in a recession!

Tuesday, April 01, 2008

Blogging About Money

Wow! Blog overkill. Money has got to be one of the most feed clogging blog topics.

The Simple Dollar is a blog I've been reading for the past couple months and I really appreciate it. The author just quit his job and now is a full time writer - pretty neat! I find him to be more humble than most financial writers and he seems deeply interested in teaching.

I am going to start working my way through the series 31 days to fix your finances. I perused it and the content, at first glance, appears full of practical wisdom (i.e. how to stuff.)

No FPU Class This Week Because Of Snow

The last three times that I've laced up my skates this year and went for a little stroll, snow has covered everything within 48 hours. I am itching to skate and start training for this years marathon plans but I'll have to remain patient. I am also itching to move on through Financial Peace University but patience is called for here as well I guess. Last nights session was suppose to cover Career. I was really looking forward to it.